US finalizes $9.63 billion loan for Ford, SK On joint battery venture (updated)

Samsung SDI

16/12/2024 13:56

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      To help finance construction of three battery making
plants
    

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      Loan higher than conditional commitment of $9.2 bln
    

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      Biden incentivizing EV sector ahead of Trump taking over  
    

  
 (Adds DOE, Blue Oval comments)
    By David Shepardson
       WASHINGTON, Dec 16 (Reuters) - The U.S. Energy
Department on Monday said it has finalized a $9.63 billion loan
to a joint venture of Ford Motor  F.N  and South Korean battery
maker SK On to help finance construction of three new battery
manufacturing plants in Tennessee and Kentucky.
    The low-cost government loan for the BlueOval SK joint
venture is the largest ever from the government's Advanced
Technology Vehicles Manufacturing loan program. SK On is the
battery unit of energy group SK Innovation  096770.KS . 
    The final award - first reported by Reuters - is one of a
series of actions by the Biden administration to boost electric
vehicle production before President-elect Donald Trump takes
office next month.
    The amount is higher than the $9.2 billion conditional
commitment announced in June 2023 for the BlueOval project.
Trump and his advisers have been critical of the Biden
administration's efforts to incentivize EV production.
    "This program is essential to getting people to choose the
United States of America," said Jigar Shah, who heads the DOE
Loan Programs office, in an interview. "When you look at the
competition that we have from China, it is very clear to me that
they have used low-cost debt for a very long time to promote a
lot of manufacturing capacity that has hollowed out many
communities in Kentucky, Tennessee, and other states around the
country."
    The joint venture is building battery manufacturing
facilities in Kentucky and Tennessee that will enable more than
120 gigawatt hours of U.S. battery production annually.
    BlueOval SK said it has invested more than $11 billion to
date in the construction of the three 4-million-square-foot
facilities and plans to begin production at the first Kentucky
plant in 2025 and will be ready to begin production in Tennessee
in late 2025.
    Asked why it took nearly 18 months to complete the loan,
Blue Oval SK said the DOE undertook rigorous due diligence that
had to conduct technical, market, financial, credit, legal,
regulatory, and other reviews.
    Earlier this month, the DOE said it is planning to loan up
to $7.54 billion to the StarPlus Energy joint venture of
Chrysler-parent Stellantis  STLAM.MI  and Samsung SDI
 006400.KS  to help build two EV lithium-ion battery plants in
Indiana.
    The conditional commitment award must still be finalized and
includes $6.85 billion in principal and $688 million in
capitalized interest 
    The DOE said last month it was proposing to loan Rivian up
to $6.6 billion to build a plant in Georgia to begin building
smaller, less expensive EVs in 2028.
    In December 2022, the DOE finalized a $2.5 billion low-cost
loan to a joint venture of General Motors  GM.N  and LG Energy
Solution to help pay for three new lithium-ion battery cell
manufacturing facilities in Ohio, Tennessee and Michigan.

 (Reporting by David Shepardson
Editing by Mark Potter)
 ((David.Shepardson@thomsonreuters.com; 2028988324;))